Meaning of Neighborhood Stabilization Program
NSP (Neighborhood Stabilization Program) is an initiative established by the U.S Congress with the objective of stabilizing communities that have been subjected to property abandonment and foreclosures. This program was initiated under Housing and Economic Recovery Act of 2008, and it was intended to repurchase and redevelop the abandoned and foreclosed properties and homes (Neighborhood, 2016). Low- income individuals who default to service their mortgages usually have their residential property repossessed by the lenders. People are evicted from their homes, resulting in abandonment and foreclosure of the property. Such property would remain under the ownership of private lenders after the eviction of the defaulters. However, the government provides NSP funds to purchase the abandoned and foreclosed homes with the aim of providing stability to low-income communities whose rates of home disclosure and abandonment are high. The Congress sets the eligibility criteria for communities that qualify for NSP funds. These funds are made available to individuals and families whose incomes are below 120% of AMI (Area Median Income). Additionally, the Housing and Economic Recovery Act stipulates that 25% or more of NSP funds will be used to purchase and redevelop the foreclosed homes for housing families whose incomes are less than 50% of AMI (Area Median incomes). NSP provides a definition of low-income families or individuals by stating the income bound for people who can benefit under CDBG (Community Development Block Grants) program (Neighborhood, 2016).
The purpose of the Neighborhood Stabilization Program
NSP program was intended to meet various national objectives. The funds were used to purchase and redevelop the abandoned homes to provide housing facility to low-income families and individuals. Additionally, the program was meant to provide emergency assistance to low- income groups that would remain homeless after the foreclosure of their property. The government also intended to promote community development and eliminate slums by addressing the needs of marginalized communities. The NSP funds were used to provide or improve residential structures for housing families or individuals with incomes below 120% of the AMI as a way of responding to the foreclosure crisis. Additionally, the funds were used to rehabilitate or construct housing units, provide homeownership assistance, and improve infrastructure as a way of redeveloping the area (Neighborhood, 2016).
Who will be responsible for formulating the program
The program is intended to benefit individuals or families in various blocks whose incomes are less than 120% of AMI (Area Median Incomes). The individuals responsible for formulating this program are officials selected by the Congress. According to the Congress, NSP funds are appropriated in three rounds. The first round involves allocating funds to both state and local governments on the basis of a stated formula in accordance with HERA (Housing and Economic Recovery Act). The second round involves allocating NSP funds on a competitive basis according to ARRA (American Recovery and Reinvestment Act). In this round, the Congress required the funds to be allocated to 56 states and local governments as well profits and non-profits organizations. In the third round, NSP funds were appropriated in accordance with section 1497 of WSRCPA (Wall Street Reform and Consumer Protection Act) using a given formula to 270 states and local governments (Neighborhood, 2016).
Role that citizens will play in the process
Citizens are expected to play a pivotal role in ensuring effective implementation of the programs of HUD (Housing and Urban Development). One of the roles that citizens would play in the program would be to help in the identification of areas that qualify to benefit from NSP funds. Additionally, citizens should keep oversight to ensure that all funds allocated to NSP are used to serve families and individuals who fall under the stipulated income brackets, and that no funds are misappropriated. Citizens will also provide useful information to help in the identification of individuals and families that should benefit from the program (U.S. Department, 2014). Areas that should benefit from NSP funds should be areas with greatest needs such as areas with the largest number of foreclosures, areas with the largest number of homes that are financed by loans related to subprime mortgages, and areas that are highly likely to have a significant increase in the number of property foreclosures. As such, citizens will help NSP officials in the identification of those areas to ensure that NSP funds are appropriately used to benefit the most needy community members (U.S. Department, 2014).
Whether Neighborhood Stabilization Program is a viable alternative to deal with foreclosure crisis
NSP program helps to provide housing facility to individuals and families that would otherwise live in slums due to lack of financial ability to purchase houses. The settlement of people in various areas through the use of NSP funds promote urban development and improve people living conditions. Additionally, by using NSP funds, the government promotes the social welfare of low- income people and rehabilitation of marginalized communities. If the government does not offer NSP program to settle low-income groups, the abandoned and foreclosed would probably be sold to rich people, who would exploit the poor by charging them high rates. The settlement of people through NSP program is therefore a viable alternative to dealing with the foreclosure crisis.
Type of impact that the program have in revitalizing communities distressed by high foreclosure rates
NSP program acts as an emergency assistance provider to low-income earners by providing them with an opportunity to enjoy housing facilities that they would not have enjoyed without such a plan (Neighborhood, 2016). The program saves many low-income individuals from poor living conditions and improves their living standards. Additionally, the program relieves low-income families and individuals the stress of having their property sold by lenders through government interventions to purchase the property before it can be sold to private individuals that would exploit the weak through high rates. Thus, the program serves to rehabilitate the marginalized community members and empowers them by uplifting their standards. The foreclosed residential areas would be occupied by the rich were it not be the government interventions through Neighborhood Stabilization Program. This is due to the fact that the houses would be purchased by high-income individuals while the weak would be evicted to the slums. Therefore, the NSP funds have a great impact on the social welfare of the poor.
Whether the program is a good use tax dollar
The government uses the tax dollar to purchase the abandoned houses and to settle low-income groups in the community. Poverty alleviation is one of the national goals of the government. The use of NSP funds to promote urban development and rehabilitate the poor constitutes a fundamental move towards poverty alleviation. Neighborhood Stabilization Program promotes the social welfare of people as well as their economic standards. It facilitates the rehabilitation of the marginalized groups through the elimination of slums to uplift the living standards of low-income earners. According to McGinty (2015), the improvements in people’s living standards by providing them with access to quality housing facility enhance patriotism and the willingness to contribute to national development. Appreciably, the use of NSP funds to facilitate the acquisition of property by low-income groups helps to reduce the incidences of insecurity that are associated with slums. Additionally, the elimination of slums and infrastructural development that occur as a result of resettlement of people in the foreclosed houses helps to boost social and economic growth. The government has the responsibility to promote equality through resource allocation and distribution. The use tax dollars to provide housing facility to low-income earners is a way of resource redistribution since the tax is collected from the rich and used to promote the life of the poor. Therefore, Neighborhood Stabilization Program is a good use of the tax revenue.
References
McGinty, P. M. B. J. R. (2015). Housing Policy Levers to Promote Economic Mobility.
Neighborhood Stabilization Program (2016). Retrieved August 15, 2016 from https://www.hudexchange.info/programs/nsp/
U.S. Department of Housing and Urban Development. The Community Development Block Grant (CDBG) Program’s 40th Anniversary (2014). Retrieved August 15, 2016 from http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/CDBG_Turns_40
